The Rot-Com Bubble: Oh Look, Another Tech Savior That’s Just Software’s Midlife Crisis in Disguise

Hey degenerates and spreadsheet warriors, it’s your favorite truth-bomb-dropping gremlin, Spinman, back to ruin your day with reality again. Buckle up, because the “AI bubble” discourse is currently doing Olympic-level mental gymnastics to avoid admitting what’s actually happening: software’s glorious hyper-growth era didn’t just slow down—it face-planted into a pool of its own overvaluation and is now doing the dead-man’s float while everyone pretends AI murdered it.

Let’s rewind for the people who still think “generative AI” is going to replace their CRM and their therapist in one neat subscription tier.

A few years ago, the suits looked at ChatGPT and saw dollar signs the size of Elon’s ego. “Finally!” they screamed into their overpriced noise-cancelling headphones. “A way to bolt shiny new features onto our crusty SaaS castles, sell GPUs by the truckload, and birth another generation of unicorns we can flip to the next bagholder!” Adorable. Truly heartwarming.

Except venture capital already started choking around 2018. Post-2018 funds are mostly returning between 0.8× and 1.2× TVPI. That’s finance-speak for “we lost money or barely broke even, congrats, you’re a hero.” Meanwhile, the SaaS golden goose that everyone rode from 2010–2017 started wheezing. Growth slowed. Net revenue retention started looking like a bad Tinder match—promising at first, then quietly ghosting.

But did anyone accept that maybe—just maybe—the infinite-growth fairy tale was over? Of course not. That would require self-awareness, and Business Idiots don’t do self-awareness; they do PowerPoint decks titled “AI-First Future” with 47 gradient backgrounds.

So private equity, drunk on ZIRP liquidity and zero consequences, went full regard mode. 30–40% of their deals from 2018–2022 were software companies. They levered up, bought at nosebleed multiples, and prayed every random HR payroll app would become the next Salesforce. Spoiler: none of them did. SaaS PE acquisitions peaked at a hilarious $250 billion in 2021. Today those same companies are zombie assets decaying in someone’s portfolio while the debt clock ticks like a cartoon bomb.

And the cherry on top? Private credit got in on the action too—20–25% of tracked deals, 20% of public BDC loans funneled into software. So when these rotting SaaS carcasses finally get marked down (and they will), a whole lot of leveraged lenders are going to have a very bad quarter. Shocked pikachu face.

But sure, let’s blame AI.

The narrative is so comforting: “AI is eating software!” “LLMs democratized coding!” “Agents will replace every dashboard with a prompt bar!” It lets everyone pretend the patient was healthy until the robot showed up with a scalpel. Reality check: software growth was already circling the drain. Declining top-line growth, shrinking NRR, customers actually thinking twice before renewing another $120k ARR “nice-to-have” tool. That’s not disruption; that’s entropy plus basic economics.

The “AI lowers barriers to software” take is especially regarded. Buddy, if you think pasting code from Claude into VS Code and hitting deploy gives you a production-grade SaaS product, I have a bridge, some NFTs, and a timeshare in the metaverse to sell you. Real software involves:

• Keeping the damn thing running 24/7 without bankrupting the company on cloud bills
• Not leaking PII because someone forgot to rotate a key
• Scaling when Karen from accounting logs in at 3 a.m. Eastern during quarter close
• Dealing with the fact that every dependency is secretly maintained by a depressed Russian on life support

LLMs help write the first draft faster. They do not conjure reliable, secure, observable, performant systems out of thin air. Anyone saying otherwise is either terminally online or has a deck to pitch.

And don’t get me started on the “agents will replace UIs” cope. Yeah, tell that to the Fortune 500 who still can’t get their ERP to stop crashing when someone changes a tax code. “Just ask the agent to file Q3 returns” — sure Jan, I’ll get right on explaining SOX compliance and audit trails to a stochastic parrot.

Evidence of this mythical SaaS genocide? Zero. No tidal wave of contract cancellations. No 8-Ks screaming “our biggest customer left for Cursor + vibes.” Just stock prices tanking because investors read too many Substack doom threads and panicked. Classic.

Meanwhile, who’s actually printing money on AI? Anthropic limped to $5B revenue on $60B of funding—impressive burn rate, truly. OpenAI? Reports suggest they’re nowhere near the $13B fairy tale number people love to throw around. If AI was the software assassin everyone claims, you’d think the hitmen would at least be cash-flow positive.

So here’s the unfiltered take: The Rot-Com Bubble is real, it’s ugly, and it’s been rotting for years. AI isn’t killing SaaS; it’s just the latest scapegoat so VCs, PE firms, and CEOs don’t have to admit they bet the farm on perpetual 40% YoY growth in a maturing industry.

Keep coping if it helps you sleep. I’ll be over here watching the zombies shuffle while the next shiny narrative gets pumped. See you at the bottom—or whatever’s left of it.

Stay regarded, my friends.
Spinman out.